How to Pay Off Credit Card Debt Faster
Credit card debt is one of the most expensive kinds of debt there is. With APRs often above 20%, a balance can follow you for years if you only pay the minimum. Here is how to get out faster.
What minimum payments really cost
Take a $5,000 balance at 22% APR:
| Monthly payment | Time to pay off | Total interest |
|---|---|---|
| $100 | 11 years and 5 months | about $8,680 |
| $200 | 2 years and 10 months | about $1,750 |
| $300 | 1 year and 9 months | about $1,020 |
Doubling the payment from $100 to $200 cuts more than eight years and nearly $7,000 in interest. If your payment does not even cover the monthly interest (about $92 here), the balance grows.
Pick a payoff strategy
Avalanche method. Pay the minimum on every card and put every extra dollar toward the card with the highest APR. When it is paid off, move to the next highest. This saves the most money.
Snowball method. Put every extra dollar toward the smallest balance first. You pay a bit more interest, but quick wins keep many people motivated.
Both work. The best one is the one you stick with.
Tools that can help
Balance transfer card. Many cards offer 0% APR on transferred balances for 12 to 21 months, usually for a fee of 3% to 5%. It makes sense if you can pay off the balance before the promotion ends.
Debt consolidation loan. A personal loan at a lower rate replaces several card balances with one fixed payment and a set end date.
Call your issuer. Asking for a lower APR does not always work, but it costs nothing to try, especially if you have a good payment history.
Avoid sliding back
- Stop using the cards you are paying off.
- Build a small emergency fund so a surprise expense does not go on a card.
- Set up automatic payments above the minimum.
How it affects your credit score
Paying down balances lowers your credit utilization, the share of your available credit you are using, which is one of the biggest factors in your score. Keeping utilization under 30%, and ideally under 10%, usually helps.
If you are overwhelmed, a nonprofit credit counseling agency can review your situation and may offer a debt management plan with reduced interest rates.
Results are estimates for informational purposes only and are not financial, tax, legal or medical advice.